Appendix B: Fuel Depletion and Peak Oil Guarantee Volatility
In the near term, the International Energy Agency (IEA) expects demand to keep accelerating past supply, which has has leveled since 2005 at about 86 million barrels per day (mbd). It projects demand to rise toward 90 mbd in 2008.  The IEA now admits that significant shortfalls are likely within the next 5 years,  and that “a supply side crunch in the period to 2015, involving an abrupt escalation in oil prices, cannot be ruled out." 
Over the longer term, IEA optimistically expects that world oil resources will be able to meet projected world demand of 116 mbd in 2030, with most of the increase coming from OPEC countries. James Mulva, CEO of ConocoPhillips, doubts that supply will ever exceed 100 mbd.  The CEO of French oil company Total doubts it would even get that high. 
"As Exxon Mobil data depicts, new oil discoveries worldwide peaked in the 1960s, making it extremely unlikely that large new discoveries will change the situation. New oil production – both to meet new demand and to make up for decline in existing fields – will have to come from new wells being drilled and enhanced oil recovery in existing fields."
The most important reason for stagnant oil production is a simple one which until recently was not widely discussed: fossil fuels are finite, and we are encountering supply limits. We are moving from 150 years of steadily increasing oil supply to a future of decreasing oil supply. While there is debate as to when this will occur, there is no dispute that it will be some time within the next 30 years.  When half the oil in a field has been removed, the remaining oil becomes more difficult and expensive to extract and refine, thus raising the price.
Long-term world oil production forecasts vary based on geological estimates of the total amount of the world’s recoverable oil reserves. Estimates fall into one of three positions: 2, 3 or 4 trillion barrels. By 2005, the world had consumed about 1 trillion barrels. Analysts at the US Geological Survey say the total is around 3 trillion barrels. The US Energy Information Agency (EIA) predicts that world oil production will peak in 2037 followed by a permanent decline.  The Association for the Study of Peak Oil and Natural Gas (ASPO), an international group of petroleum geologists and other scientists, dismisses EIA projections as overly optimistic.  The Sierra Club’s official energy policy statement recognizes imminent peak oil. 
Commercial oil extraction began in the US in 1859, and discovery of new oil fields peaked in the 1930s. For a long time, the US not only produced all the oil it needed but was a leading exporter as well. Domestic production grew steadily until it peaked in 1970, about 40 years after the discovery peak. Since then, US production has declined.  Today we produce one-third of the oil we consume, with the rest coming from imports, primarily from Canada, Saudi Arabia, Mexico, Nigeria and Venezuela. 
Production is in decline in 33 of the 48 largest oil-producing countries.  Oil production from all countries outside the former Soviet Union and OPEC remains flat; new production has not been enough to offset annual supply declines of 4 to 7%.  There are indications that Saudi oil production is beginning to decline.  EIA, IEA and OPEC data suggest that Saudi production fell 8% in 2006,  even though forecasts of rising world oil production from EIA and IEA are premised on the ability of Saudi Arabia, the world’s leading oil producer, to raise output. The CEO of Mexican oil company Pemex announced that production from Mexico’s giant Cantarell oil field is expected to decline 14% annually from 2007 to 2015.  95% of Canada’s proven reserves are oil sand deposits in the province of Alberta, which are much more difficult to extract and process than conventional crude oil. 
There is doubt about OPEC claimed reserves. In the 1980s, many OPEC countries reported sudden 50 to 100% gains in their oil reserves.Their claimed reserves, which account for about two thirds of the world's oil reserves, have not diminished over time despite years of production. However, OPEC country records are not open to external audits. 
Recent government studies about oil depletion
The Hirsch report, commissioned by the US Department of Energy and whose lead author is the former director of the US nuclear fusion program, recommends Federal responses to the rising fuel prices expected with peak production.
The peaking of world oil production presents the US and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking. 
The US Governmental Accountability Office (GAO) issued a report on peak oil in February, 2007. Citing studies predicting that oil production will peak “between now and 2040,” the GAO found no coordinated federal strategy for reducing the uncertainty about the peak’s timing or mitigating its consequences.  A poster explaining peak oil is now available on the US Department of Energy website.  The National Petroleum Council went so far as to admit that the US and the world “face hard truths about the global energy future." 
Banking on oil production depleting gradually would be unwise. Dr. Hirsch reviewed a number of regions and countries that peaked and found that “the onset of peaking can occur quite suddenly, peaks can be very sharp, and post-peak production declines can be comparatively steep (3-13%)." 
Compared to climate change, fuel depletion and peak oil have been nearly absent from the mainstream media, but that’s changing as evidence for fuel depletion becomes impossible to ignore. Peak oil has recently been covered by CNN, the Wall Street Journal, and Time Magazine.  (News about fuel depletion is archived online at Energy Bulletin.net)  This is a positive sign, because government officials will only act when a critical mass of constituents become strongly concerned about a problem and mainstream media coverage is essential for increased awareness. Also essential, as former government analyst Tom Whipple said: "In the case of the U.S. it will take prolonged shortages at the pumps. The uproar will lead to a universal understanding of peak oil and useful policies."
The current climate crisis makes getting off oil necessary, and fuel depletion makes it inevitable. Whether we manage the transition equitably or have it forced upon us is ours to choose.
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2. “Medium-Term Oil Market Report - July 2007,” IEA, “Entering the tough oil era: the new oil pessimism,” Prof. Michael Klare, Aug. 16, 2007, TomDispatch.com,
“IEA sees oil supply crunch looming,” Reuters, July 9, 2007; “Oil supplies ‘face more pressure,’ BBC News, July 9, 2007,
3. "World Energy Outlook 2007," IEA,
4. “Big Oil CEOs Point to Constraints on Supply Growth,” European Tribune, Nov. 10, 2007,
5. “Total chief warns on oil output,” Financial Times, Nov. 4, 2007,
6. “Long Term World Oil Supply Scenarios,” US EIA, Aug. 18, 2004; “The Debate over Hubbert’s Peak: A Review,” Moujahed Al-Husseini, Gulf PetroLink, Bahrain, vol. 11, no. 2, GeoArabia, 2006, p. 22, ASPO, http://www.peakoil.net, http://www.aspousa.org;
“Megaprojects: new capacity fails to boost 2006 production,” Chris Skrebowski, Editor, Petroleum Review, Feb. 2007, .
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16. International Herald Tribune, Nov. 22, 2006,
17. "Canada oil overview," US EIA,
18. “Why peak oil is probably about now,” Stuart Staniford, The Oil Drum, March 1, 2006,"OPEC," US EIA,
19. Dr. Robert Hirsch, biographical notes,
“Peaking of World Oil Production: Impacts, Mitigation, & Risk Management,” Hirsch, et al.,
Science Applications International Corporation (SAIC), Feb. 2005,
20. “Crude Oil: Uncertainty about Future Oil Supply Makes It Important to Develop a Strategy for Addressing the Peak and Decline of Oil Production,” GAO-07-283, US GAO, Feb. 2007,
21. Peak oil poster, US Dept. of Energy,
22. “’Hard truths’ about global energy detailed in new NPC study,” report on press release from National Petroleum Council, Energy Bulletin, July 18, 2007,
23. “The Shape of World Oil Peaking: Learning From Experience,” Robert Hirsch, National Energy Technology Laboratory,
24. "In a World Short of Oil, Provisions Must Be Made, WSJ, Jan. 26, 2008, Page A1,
“Oil Officials See Limit Looming on Production,” WSJ, Nov. 19, 2007,
“Peak possibilities,” Time, Nov. 21, 2007, “The end of oil,” CNN, Sept. 14, 2007,
25. Energy Bulletin,
26. “Peak oil and the media,” Tom Whipple, ASPO-USA Conference, Oct. 2007,
Oil and the Media Tom Whipple.pdf